Goldman agrees sale and leaseback of new London HQ – Financial Times

Goldman Sachs has agreed the £1.2bn sale and leaseback of its new London headquarters with Korea’s National Pension Service in the latest sign of strong demand for property assets in the city.

The US banking giant, which will move into the 826,000 square foot Plumtree Court office in the City financial district in the middle of next year, has taken a 25-year lease on the building, with the option to break it after 20 years.

The purchase is the latest sign of overseas investors’ appetite for central London buildings ahead of the UK’s departure from the European Union, despite questions about the city’s future as the financial centre of Europe.

Financial Times calculations have suggested Goldman Sachs plans to cut about 500 London jobs as a consequence of Brexit, instead recruiting for its new European hubs in Frankfurt and Paris.

Goldman said it will consolidate its 6,000 London staff spread across three existing locations into the 10-story building, which has room for another 2,000 people. The building is designed so that the bank can also bring in other tenants, it said.

In a tweet late last year, Goldman’s chief executive, Lloyd Blankfein, said: “GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control. #Brexit.”

At £1.2bn, the deal is the largest for a London office building this year and the second-largest price ever behind last year’s sale of the “Walkie Talkie” tower in the City for £1.3bn to Hong Kong’s Lee Kum Kee.

The sale to NPS, one of the world’s largest pension funds, forms part of a surge of Korean investment into UK property: some £1.1bn of Korean money entered the market in the first half of 2018, according to the property agents Cushman & Wakefield. Prices for prime London assets have stayed firm despite Brexit concerns.

Scott Kim, head of global real estate at NPS, said the building was a “high-quality asset which is well-aligned with our defensive strategy”.

Goldman has routinely carried out sale-and-leasebacks on its buildings, including its current headquarters on nearby Fleet Street in 2005.

Richard Gnodde, head of Goldman Sachs’ international operations, said: “The development of Plumtree Court and our signing of a long-term lease demonstrates our continued commitment to London.”

The bank has been planning its move from Fleet Street for six years. When completed, Plumtree Court will be about half the size of Goldman’s New York headquarters at 200 West Street.

Deutsche Bank likewise signed a new 25-year lease in London last year to bring together staff from several London locations, committing to take at least 469,000 square feet at 21 Moorfields, a site under construction in the City of London.